Insights

You know that setting up a household budget is something that you need to do. Doing so can help you prepare for your retirement, pay for your children's college educations and make sure that you don't run up high-interest-rate credit card debt.

Unfortunately, budgeting is also something few people like to do. It takes time and it requires organizational skills. That is something that many of us lack, or at least think we lack.

However, here's the good news: Creating a budget doesn't have to be difficult. In fact, there are three simple ways to create an accurate budget for your household. Just pick the method that works best for you and commit to it.

Bring out the envelopes

There was a time when the envelope method of budgeting was king. Today, this method feels a bit old-fashioned, what with the proliferation of online budgeting tools available. However, for many households, the envelope system works just fine.

Here's how it works: Set aside a series of empty envelopes and label each of them with a particular expense category. One envelope might read "mortgage payment." Another might say "groceries," while still another might say "entertainment." When you receive your paycheck, put the appropriate amount of money — the money you've set aside for each expense in your monthly budget — in the right envelope.

If you stick to this method, when each of your bills come due, you should have enough money in the corresponding envelope to pay it. Also, when you want to go to the movies or eat out, you can only do so if there's enough money left in that "entertainment" envelope.

This method has fallen a bit out of favor as more consumers are using their debit and credit cards to pay their bills each month. However, if this method works for you and your family, there's no reason to abandon it. It's simple and effective, if done properly.

Online budgeting

The Internet is now full of many budgeting tools, all of which let consumers enter their expenses and revenues to determine quickly where their money is going and whether they're breaking their budget.

Some of the more popular online budgeting tools include Quicken and Mint. Both are powerful offerings that come with money management tools, financial calendars, calculators, spreadsheets and everything else you need to track your spending and earning each month.

You can search the Internet for "online budgeting tools" to find others. If you choose to use a less popular budgeting tool, make sure to do your research to ensure it is legitimate before inputting any information. The only way to know which one is the best for you and your household is to try several out. You'll soon discover the online tool with which you feel the most comfortable. 

If you are an Old National Online Banking user, you can take advantage of Money Management, which allows you to see all your financial accounts in one place — including those at other financial institutions. Money Management allows you to analyze your total spending, loans and investments.

Separate accounts

You can also use separate checking and savings accounts at your bank for budgeting and managing various expenses. For instance, open a checking account reserved solely for your mortgage payment. For each paycheck you receive, deposit the right amount of money in that account. Then, each month, your mortgage payment should be ready to go.

Do this with your monthly grocery allowance, an entertainment fund, insurance allotment and car payment fund. If done properly, this method works a bit like the envelope method of budgeting. Only with separate accounts, you will not have to worry about storing large amounts of cash in your home.

Of course, these are just three of the many budget methods that you can employ. Be creative and experiment. You'll soon find the budgeting strategy that works best for you.

The only wrong method is not budgeting at all. That is a formula for running into debt and scrambling to pay your bills each month.